Hilchos Choshen Mishpat

Volume III : Number 17

Verbal Commitments by Community Officials

Question:

The officers of a synagogue decided to purchase new furnishings on behalf
of the synagogue. They entered a verbal agreement with a carpenter
regarding the specifics of their order, including price and delivery date
of the new furnishings. A week later, one of the congregants, who himself
was a carpenter, approached the officers of the synagogue and offered to
fill the same order at a lower price and with better terms.
A. There was only a verbal agreement, no contract was signed and no
formal Kinyan was made with the first carpenter. Even if there would have
been a Kinyan, since the carpenter had not yet started to work for them,
any commitment that they made with him is on something that does not yet
exist (Davar Shelo Ba L'Olam) and therefore could not be Halachically
valid.

B. Since their responsibilities as communal officers dictate that they
must be concerned for the communal funds in their care, and they will
save the synagogue a substantial amount of money by ordering from the
second carpenter, it is their obligation to transfer the order to the
second carpenter.

What is the Halacha?

Answer:

A. Officials that have been appointed or elected by the public are
obligated to honor any commitments that they have made on behalf of the
public, whether in writing or verbally. It makes no difference if this
commitment was to a private individual or a public corporation.

Such commitments must be honored even if as a result the public will
incur a financial loss. (1)

Therefore, in the above case, all commitments between the first carpenter
and the synagogue must be honored by both parties.

It is considered improper and demeaning (G'nai) for a public
organization or its officials to file a claim against others, or to try
to renege on an agreement that they have made. Even if the cause is
valid, and a private individual would be permitted to file claim or
refuse payment, the organization is not permitted to void its agreement.

However, if they have purchased something on behalf of their organization
which is grossly damaged, or hired someone to work who turns out to be
totally inadequate for the job, where it is very clear that anyone in a
similar situation would demand a refund or fire the worker, the officers
of the organization are also permitted to do so. (2)

Commitments by representatives of a public organization on behalf of
their organization are Halachically binding even when only verbal, as we
state above. This is true even in situations where such a commitment
would not be binding for a private individual. For example, commitments
to buy or sell items that do not yet exist (Dovor Shelo Ba L'Olam), and
commitments involving "games of chance" (Asmachta), or commitments to
perform services (Kinyan Devarim) even when no formal Kinyan was made,
are all Halachically binding on a public organization.

Commitments made by community representatives that were known to be
detrimental to the communal good at the time that they were made, are
null and void. The reason for this is because the representatives were
appointed by the public to act on their behalf to the best of their
ability, not to their detriment. When they act in a manner known to be
damaging the public, they lose their status as representatives.
Therefore, any commitments entered by these officials for personal gain
are void, and need not be honored by the community or organization.

Similarly, if the bylaws of the organization state that the matter that
the representative has entered a commitment regarding, must be decided
upon by vote of the entire board or public referendum, the commitment is
not at all binding upon the organization if this was not done.

It is possible that in the above two cases, the representatives may be
held personally liable to fulfill the commitment that they made to
suppliers, workers, etc., and may not ask to be reimbursed from communal
funds. (3)

Sources:

(1) It is written in the Teshuvos HaRosh (Klal 6 at the end of Siman 19):
"It is clearly the custom that anything that community officials agree to
do (on behalf of the community) is 'established and binding' (Sharir
V'Kayam) even if no formal Kinyan was made. This also applies to any
decrees made upon individuals or the community at large, all words stated
are as if 'written and given over' (Kesuvim U'Mesurim)".

The HaGaos Mordechai in Bava Metzia (457-458) also states that any
commitments made on behalf of the public, or in public, do not require a
Kinyan, and a verbal commitment is as binding as a formal Kinyan done
between two individuals. The Teshuvas HaRashbash (Siman 112) states that
this holds true regarding the individual who has entered an agreement
with the community as well. Just as the community can not renege on any
verbal commitments with him, he can not renege on any commitments with
them.

(2) This is stated in the Teshuvas HaRashbash, Siman 566. Also see Siman
112.

(3) This is also stated in the Teshuvas HaRashbash, ibid., in the name of
the Teshuvos HaRashba and the Teshuvos HaRosh. See also the Shulchan
Oruch, Choshen Mishpat (182:2,4,8) and its commentaries regarding a
purchasing agent who mistakenly purchased items that the sender did not
wish him to purchase. A distinction is made there whether or not the
seller was aware that the purchaser was an agent for someone else, in
which case the sale is void and the agent has no obligation to the
sender, of if the seller thought that the agent was the actual buyer, in
which case, although the sender is not bound by the sale, the agent will
have to reimburse the seller for any loss from his own personal funds.

This week's class is based on a column by Rabbi Tzvi Shpitz, who is an Av
Bet Din and Rosh Kollel in the Ramot neighborhood of Jerusalem. His
column originally appears in Hebrew in Toda'ah, a weekly publication in
Jerusalem. It has been translated and reprinted here with his permission
and approval. His columns have recently been compiled and published in a
three volume work called Mishpetei HaTorah, which should be available
in your local Sefarim store.

This week's class is based on a column by Rabbi Tzvi Shpitz, who is an
Av Bet Din and Rosh Kollel in the Ramot neighborhood of Jerusalem. His
column originally appears in Hebrew in Toda'ah, a weekly publication in
Jerusalem. It has been translated and reprinted here with his permission
and approval. His columns have recently been compiled and published in a
three volume work called Mishpetei HaTorah, which should be available
from your local Sefarim store.

This week's class is based on a column by Rabbi Tzvi Shpitz, who is an Av
Bais Din and Rosh Kollel in the Ramot neighborhood of Jerusalem. His
Column originally appears in Hebrew in Toda'ah, a weekly publication in
Jerusalem. It has been translated and reprinted here with his permission
and approval.

We hope you find this class informative and stimulating! If you do not see a subscription form to the left
of the screen, access the Advanced Learning Network to
subscribe to Business-Halacha.

For information on subscriptions, archives, and other Project Genesis
classes, send mail to learn@torah.org for an automated reply. For
subscription assistance, send mail to gabbai@torah.org.

Please Note: The purpose of this column is to make people aware of Choshen Mishpat
situations that can arise at any time, and the Halachic concepts that may be used to resolve them. Each
individual situation must be resolved by an objective, competent Bais Din (or Rabbinic Arbitrator) in the
presence of all parties involved!